Saturday, February 18, 2012

For the love of negotiation

"Negotiation is a dialogue between two or more people or parties, to bargain for individual or collective advantage. Negotiation is intended to aim at compromise" - Wikipedia

Most of us don't negotiate everyday and even when we do, we try to run away from it. This isn't very atypical of human nature. Ambiguity is something no one likes and it takes a lot to develop a tolerance for it.

A negotiation is typically created in the first place because of information asymmetry. When two parties have certain pieces of information they don't wish to share with each other while still trying to do business together is what creates the gyration. 
For example, if you buy a product X from a vendor for $4 and sell it for $5, you make $1 as profit. But is $4 actually your cost? Maybe you can negotiate for a lower cost? In order to find out this answer, you would have to figure out what the cost of manufacturing the product for the vendor is, but without understanding the complications of the business in practice itself, which is very likely to give inaccurate conclusions. And the vendor is under no obligation to share his cost build-ups with you, hence the negotiation. 

Information asymmetry is not only typical between a buyer-supplier relationship, but is also typical within a company and its own walls.
Two divisions who might not want to share information with each other might be creating inter-divisional negotiations without understanding group accountability. Perhaps they could have shared all the information with each other and created win/win situations, but instead end up with compromise(as Wikipedia stated, is the objective of a negotiation). 

Don't let barriers like these plague your workplace. Ask and give information as requested by others and help create a negotiation free workplace.